Box.net announced last week that they secured another US $81m funding from NEA, Bessemer Venture Partners, salesforce.com, SAP Ventures and existing investors. We have mentioned a number of times before how Box.net are more of a threat to their more expensive peers in both the ECM and DAM sector than many realise. Their “Inside the Box” corporate blog contains a post by co-founder Aaron Levie. Most interesting for me was this section where he compares emerging cloud vendors with microcomputer upstarts from the early 1980s:

“For a startup, this means building a product that is unequivocally superior in the ways that are now important to customers today. Many of the current leaders in the enterprise software market emerged at a time when the mainframe was just waning in importance, and they innovated heavily through the client/server paradigm and explosion of PCs in the workplace. Well, this transition can now be considered complete, and a new one is in progress that brings with it a new set of market forces. In the post-PC world, we’re more mobile than ever before, we collaborate across networks and borders, and we use applications from dozens of different service providers – applications that need to work together.” [Read More]

This is clearly aimed at Microsoft and Sharepoint specifically. The arguments about Box.net being ‘lightweight’ and unsatisfactory for enterprise deployments appear to echo the same critique of microcomputers made by mainframe manufacturers at the time. A few commentators in the ECM industry have been somewhat uncomplimentary about Box.net in the past. Alan Pelez Sharpe from consultants, Real Story Group said this in January:

“Box.net have certainly been gaining some attention this past 18 months, and for lightweight departmental document management needs they have a fair amount of traction. Frankly I doubt the new release will have much impact, other than to improve the experience of existing users” [Read More]

However, not all his colleagues are now so sure they are easy to dismiss. Jarod Gingrass made this comment last week in response to the news of Box.net’s funding:

“Not long ago, many were scoffing at Box as being just another California start-up foolishly comparing themselves to the SharePoint behemoth. Box did not (and still doesn’t) offer nearly as much functionality as SharePoint. However, with $162 million in funding, they cannot be ignored as a contender.” [Read More]

As mentioned, there are significant issues in terms of the functionality available to Box.net customers as compared with Sharepoint. Also the whole data security question about usage of Cloud hosting rather than a corporate data centre. That said, Box.net have a serious warchest available to them now for marketing purposes and a clear ability to provide products which are ‘good enough’ rather than ECM perfection.

Just as with the microcomputer’s erosion of demand for mainframes 30 years ago, one could find that many of the remaining 50% of ECM/DAM implementations are arranged privately by end users deciding to self-implement solutions that avoid their IT department, the need for external consultants plus the whole slow and expensive process of corporate purchasing in general. In my view, they may well use services like Box.net to do it.

A more important question in my mind is how long Box.net can remain independent before someone (Microsoft?) decide they are too much of a thorn in their side to remain independent and make the owners an offer they cannot refuse.